A drug manufacturer has come under fire in Britain for allegedly diverting $1.35 billion through Bermuda to avoid taxes.

A report in London’s Evening Standard said pharmaceutical firm Napp has funnelled cash through its Bermudian-based Mundipharma offices for more than 25 years.

Napp, which manufactures painkiller OxyContin among other drugs, and Mundipharma are controlled by the billionaire Sackler family.

The UK’s NHS Digital, which provides data to the National Health Service, said Sackler drugs make up 68 per cent of the volume of the oxycodone market in England and 29 per cent of the entire $356 million opioid market.

The newspaper report, published last week, said the company manufactured drugs in Cambridge, England, and has paid taxes on drugs sold to the NHS.

The report added sales to other parts of the world were routed through Mundipharma’s office on Par-la-Ville Road in Hamilton.

The story said: “This would have allowed profit to be taken on the island nation, where no tax is payable.

“According to our sources, Mundipharma bought the drugs from the UK at one price and sold them to Mundipharma entities for a lot more — keeping the profit made in Bermuda.

“However, the products were shipped directly from the UK to the country where they were sold and did not go anywhere near Bermuda.”

Napp’s turnover for international sales totalled $182 million in 2015.

The report said: “Over 25 years, our sources said, the amount of profits diverted to Bermuda from Mundipharma Europe and Australasia was well over £1 billion.

“If the 2015 profit had been taxed in the UK, where the drugs are manufactured, it would have attracted corporation tax of 20 per cent, which equates to £30 million.”

Over the 25 years the scheme has operated, this may add up to the avoidance of hundreds of millions of pounds in corporation tax.

Bermuda’s role was reduced in 2015 due to changes in UK law, with profits being repatriated through the UK.

The report quoted a tax expert who said the process used by Napp was not illegal or considered tax evasion “provided the transfer pricing arrangements with Bermuda could be commercially justified”.

The unidentified expert said: “One way to add value is for the offshore company to hold the intellectual property and charge a fee for this, but in this case it appears the IP for OxyContin is held by Napp in the UK, and their larger trademark portfolio is held by Mundipharma AG in Switzerland.

“So it is hard to see, at least on the facts supplied, what activity in Bermuda added the value to justify the higher pricing.”

The expert added that it was possible that the company entered into an advance pricing agreement with HM Revenue and Customs.

The expert said: “Before 2015 this was relatively easy, as such arrangements were often difficult for HMRC to challenge successfully.

“The introduction of diverted profits tax in 2015 made it harder for multinationals and this may be why the arrangements changed so radically in 2016.”

In a joint statement, Napp and Mundipharma said they had a long history of paying taxes in the UK, including $90.7 million between 2013 and 2016.

The statement said: “Napp and Mundipharma independent associated companies based in the UK are transparent in the disclosure in their public accounts of their dealings with independent associated companies and in their dealings with HMRC.

“We follow HMRC’s guidance in full. We pay all taxes that we owe.”